I have heard that any fix-up that one does to a home they should keep their reciepts on the materials that went into the home. Then when they sell they need to turn in those reciepts.
Question?
Who, how, and where, do you turn-in those reciepts in too? What does this do for you? Where can I see the benefit to doing this?
Thanks for your responses…
Joe
Joe,
receipts can be used by the appraiser to help show value, if in fact extensive improvements have been done. especially with some lenders, if a property has recently been purchased e.g. for a flip. they can also give “warranted info” with the vendor who did the work e.g. window replacement, appliances, etc. lastly if the work was done during an escrow period, receipts can prove work done at the request of a buyer. hope this helps. as to who do you turn them into, the buyer’s agent if they have one, can then disperse, or the buyer themself if you prefer. the only official ones would be if money is being held by a third party, e.g. the title co. in which case you can turn receipts into them to complete file and release escrow.
wendy
You will actually need those receipts at tax time…you need to declare any materials used to improve or repair the property. Every dollar that you spent on materials for this purpose is a dollar that you don’t have to pay income tax on.
Example (greatly simplified for example): You purchase a property for $100K, spend $20K to fix it up. You then sell it for $150K.
If you save the receipts, the taxable gain is $30K.
If you don’t save the receipts and the IRS ‘checks you out’, you may not be able to prove the improvements/repairs and your taxable gain could easily be $50K!
Keith
kdhastedt,
Got it thanks!
Joe